Before you begin the process of equity release it would be best if you had a better understanding of the benefits as well as the requirements for property owners who use this concept. When you work with an equity-release lender you can get tax-free cash from the equity you have built up in your property.
The process does not mean that you will be downsizing or selling. In fact, you continue to own the property 100%, the deed remains in the same name, and you can live in the home and use the property during your lifetime. The amount of money available is determined by the difference between the total of all mortgages and charges still on the property and the fair market value.
Don’t Move
In the past, it was necessary to sell the property or get another mortgage to be able to use the equity you have built. The drawback with a new mortgage is that the payment obligation continues. Now, it is possible to use the funds without having to move or add payments to your obligations. (In other locations, this process may be called a reverse mortgage.)
Releasing equity on your house provides money that you can spend any way you want. Because it is based on equity you have, it is not taxable. If you want the money in a single sum, you can arrange that. If you would like to establish an account to draw on in the future, this is an option as well. In fact, some people decide to arrange a mixture of the two.
The key to success with equity release is choosing a reliable, experienced company that will work with you to make the process work as it should. The leading providers will also tell you that you can transfer your plan to another qualifying property, with no penalty assessed. If you decide to downsize to an apartment or condominium, for example, you can repay the loan with proceeds from the sale of the house.
Understand the Fees
When you talk with a representative, be sure to ask questions so that you are clear about what you are agreeing to. When working with the leaders in equity release, you should not expect to have unpleasant surprises. For instance, they will inform you upfront if there will be fees or charges for paying back the balance early. They will also work with you to find a lender that has flexible repayment requirements.
With equity release, you are entering into a lifetime mortgage, so it is important to get an illustration of how the process works in your specific situation. You can start learning by visiting the website of a responsible expert. This can answer some of the questions you may have. However, you would be wise to talk with an adviser who will take your needs, circumstances, and plans into account when working on a personalised plan for equity release. Visit the website and use the comparison calculator to get started.